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February 2018

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The second bi-monthly Monetary Policy Statement for the year 2016-17 released by Reserve Bank of India (RBI) governor Dr Raghuram Rajan today has raised business confidence of exporters, Tirupur Exporters' Association (TEA) has said.

In his statement, Rajan said that RBI would monitor rupee and dollar liquidity and ensure supplying dollar into the system in case of any extreme volatility happens due to outflow of dollar and the availability of foreign exchange reserves at $360 billion would help maintain the rupee and dollar parity.

RBI's stance to monitor rupee and dollar volatility has raised business confidence of exporters as they would not face any extreme risk of volatility in prices and exports would go smoothly, TEA president Dr A Sakthivel said in a press release.

In its policy review, the RBI has kept the repo rate unchanged at 6.5 per cent, while the CRR has been retained at 4 per cent. The reverse repo rate too has been kept unchanged at 6 per cent.

The bank said that April's inflation reading makes the future trajectory of interest rates “somewhat more” uncertain. Rising crude prices and the implementation of the Seventh Pay Commission pose an upside risk to inflation, it added.

“The expectations of a normal monsoon and a reasonable spatial and temporal distribution of rainfall, along with various supply management measures and the introduction of the electronic national agriculture market (e-NAM) trading portal, should moderate unanticipated flares of food inflation,” the bank said.

The RBI also retained the growth projection of 7.6 per cent for 2016-17 citing corporate profits and a surge in consumption. It said it will also soon review the implementation of marginal cost lending rate framework by banks. (RKS)